Topic: Budget 2021-2022




Stephen Cenatiempo: It’s twenty-three and a half minutes to seven o’clock, Stephen Cenatiempo with you this morning broadcasting live from Parliament House with, I guess the fallout or maybe the wrap up of last night’s Federal Budget is a better way to put it. We are going to talk to some of the movers and shakers to find out what particularly what the Budget means for Canberra, but more importantly, what it means for some of those big ticket items that we’ve been discussing, discussing for the last week or so. We’re joined in the studio, this time by one of the men. One of the lead authors of the Budget, he is the Minister of Finance and Leader of the Government in the Senate, Simon Birmingham. Simon, good morning.


Simon Birmingham: Good morning. Great to be with you.


Stephen Cenatiempo: It’s your first Budget as Finance Minister. How do you feel? How did you get through it?


Simon Birmingham: Look, it’s a huge effort, an exercise and a big logistical exercise of putting a Budget together and I’ve got to say, full credit to the many officials in my department, in the Finance Department, but also in Treasury who are, you know, huge contributors to being able to frame that sort of Budget, and indeed, right across government agencies, particularly health in all the circumstances where we’re dealing with a Budget that is trying to manage the response to COVID-19 still as well as address big pressure areas such as response to the Aged Care Royal Commission and all of that in the framework of trying to keep the economy strong, which is why this plan is centred on a strong economy, on jobs growth, on lower taxes for Australians to manage to keep the momentum we’ve got.


Stephen Cenatiempo: A lot of people are suggesting, and I saw opposition, know somebody that’s touted as a future opposition leader, Tanya Plibersek, say that this was a “Morrison keeper” Budget, which says that they’ve already thrown in the towel. I guess to an extent, every Budget is an election Budget and you’re always trying to please the electorate. But it was put to me by one senior economist this morning that this was an easy job for you because there was no slash at all.


Simon Birmingham: Well, this is a tough Budget in the sense that we are dealing with huge global uncertainty. I mean, in Australia, things feel pretty good right now. We’re safe from COVID so far as people going about their day to day lives. We’ve got an economy that is that is the envy of much of the rest of the world. But look elsewhere and you can see that, you know, obviously the human tragedy in India and many other countries that has been spiralling far further out of control than people anticipated just in recent weeks. Look across in Europe and they’re going into a double dip recession. So we may have in Australia, more people in employment now than was the case going into this pandemic, but we’re the only developed country in the world that does. So we’ve got these huge global uncertainties surrounding us and a certain fragility indeed as a result to how Australia keeps going and that’s why condition number one in this Budget has been to keep the recovery going by keeping Australians safe.


Stephen Cenatiempo: Which is an important point because there were a couple of major assumptions in the Budget last night, and that is that all Australians will be vaccinated by the end of the year, that we will open the international borders by mid next year, which a lot of people are saying is far too late. What happens if these things don’t happen?


Simon Birmingham: So indeed, look, the assumption there around opening the international borders is just that, it’s not a government policy decision yet. But to be able to frame a Budget, you’ve got to be able to put a point as to when you say that is probable to happen. It could be earlier if things go well, it could be later and we will be following the health advice in that regard. And that’s why we acknowledge there are uncertainties, this is a second pandemic Budget. We can’t say hand on heart that everything is rock solid certain in terms of all of the assumptions like borders reopening because you’re dealing with that very uncertain international circumstance. There’s still health advice to be had about the extent to which vaccines prevent transmission of COVID-19 between people. These are important considerations for how to make those decisions. That’s why around $40 billion dollars in this Budget is temporary investment in the health and economic response to the pandemic still, and there’s rightly a lot of focus in commentary on the big responses to aged care and mental health. But it’s also important to realise that the largest package of measures, if you like, remain the COVID -19 response measures.


Stephen Cenatiempo: I want to touch on aged care in a moment, but I want to talk about the government’s performance through this pandemic, and I’ve been largely complimentary of the way, particularly the way the federal government has handled, some of our state and territory governments not so much. But one of my criticisms, particularly of the national cabinet concept, was there didn’t seem to be any forward planning for when we came out of this pandemic, and I saw this as an opportunity to look at making that serious structural change in our economy. Is that a missed opportunity in this Budget? Was there an opportunity to make some real structural change in the economy now when we’re in this period so that when we do emerge from this pandemic, we’re a stronger nation moving forward.


Simon Birmingham: So we look at the areas where we’re pursuing economic growth and look at it across both the Budget that was only handed down in October last year, plus this year’s Budget now handed down. There’s a very strong focus on how we grow sovereign capability in Australia, how we grow our manufacturing sector. Last year, we handed down a modern manufacturing strategy with significant investment attached to it. Last night, we announced the establishment of a new office that will look at our sovereign capability within government, be able to prioritise decisions and help indeed in areas like our procurement strategies or other policy settings to really be able to ensure that as a country we maintain that sovereign capability, which has been I think, a lesson that people look very hard at coming out of COVID, measures to support that, such as the establishment of the new patent box tax measure, part of our plan there to be able to encourage innovation in Australia and in doing so, joining it up for commercialisation, manufacturing of product here by creating the right tax system for those who get breakthroughs in biotechnology, in medicines and medical supplies, to be able to keep their technology and innovations here and manufacture it here in Australia. And that, again, joins up with decisions we made in last year’s Budget around increased support for research and development for Australia. So if you look at the big picture of the plan running through these two Budgets, it’s a plan firmly focussed on making sure we build Australia’s sovereign capability as a country in manufacturing, in new technologies, our digital economy plan released in this Budget as well, looking at those new growth areas like artificial intelligence and making sure that Australia is well-placed for it.


Stephen Cenatiempo: Aged care is obviously a focus for a lot of people in the lead up to this Budget because of the royal commission. And there’s been an overwhelming response in this Budget with funding. But one of the criticisms of some people in the sector have is that this is going to have to be recurrent funding. It’s no good to just throw money at a problem without actually fixing the problem itself. We’ve seen it with education. You guys fund it, put more money into education than we’ve ever seen before, but the system doesn’t seem to get fixed at a state level. Is there a provision to make sure that we keep this ongoing because aged care is, with an ageing population, it’s not going to get any better?


Simon Birmingham: Yes, there is. So the decision was taken in last night’s Budget in relation to aged care, aren’t just there for two years or four years, they are baked into the spending assumptions going forward. And that is important to tell your listeners that the deficit projections, the net debt that Australia will carry going forward is forecast to be lower in this Budget than it was last October’s Budget, even with those decisions around aged care. So the strength of economic management, we’ve had the strength of the recovery we’ve had, enables us to be able to keep that net debt lower, not only in the next couple of years, but again going forward as a result of having a stronger economy. Now, the spending in aged care, the investment there, $17.7 billion dollars of new investment over the next four years, it’s carefully focussed in ensuring we get reform in the sector, not just more money to operators, but minimum mandatory hours of care, 200 minutes of care per resident per day in the aged care sector. At least 40 minutes of that must be with a registered nurse. And so these are then built on top of, with stronger regulatory settings, a stronger regulator, stronger safeguards, and indeed also creating an environment where there’s more choice and competition. We’re not going to have providers just able to sit on a locked up bed licence. We’re actually going to have a transparent star rating system and people, good providers will be able to establish extra beds and get people to go to them instead.


Stephen Cenatiempo: That’s an important move I’ve got to say. We’re going to a caller, Roy from Rivette has said what’s in the Budget for pensioners?


Simon Birmingham: So look for pensioners of course, we continue to have additional support there to make sure that the pension is indexed twice a year. It keeps going up and the support is there very much to make sure that, of course, the aged care reforms is, as I said, a crucial part for many older Australians. And it’s not just residential aged care. We’re also creating a further 80,000 home care places, giving more choice to people to be able to stay at home and get the care they need in that home environment as well. There’s important reform. And also then in terms of going into retirement, the measure we took that said if you downsize the family home from age 60, you’re able to put up to $300,000 dollars of that into your superannuation on the way into retirement is about helping more people to be self-funded or partly self-funded in their retirement to live a higher standard of living there.


Stephen Cenatiempo: Now, I just want one last thing before I let you go, because we do have to wrap this up, I know you’re very busy. But defence spending $1.9 billion over 10 years in defence. Is that an afterthought given the current environment?


Simon Birmingham: No people should remember where the government that came to office when we had defence spending that had slipped to its lowest level as a nation since the 1930s, we made the commitments that we would bring defence spending back up to be two per cent of GDP. It’s now running in excess of two per cent of GDP. We have an ambitious programme in terms of defence procurement across the country to make sure we equip our military with the capability, the modern technology that they need, there’s also additional funding in this Budget for our national security agencies, particularly for ASIO going forward, recognising the various threats we face.


Stephen Cenatiempo: Simon Birmingham, thanks so much for your time. Congratulations on getting through your first Budget. Big shoes to fill after Mathias Cormann moved on. So congratulations and thanks for your time.


Simon Birmingham: Thanks, mate. Look forward to speaking again.


Stephen Cenatiempo: Simon Birmingham is the Minister for Finance and Leader of the Government in the Senate and one of the architects of this Budget.